Exam 1: Accounting in Business

At the end of its first year of operations, Lockerbie and Role Company has total assetsof $3,000,000 and total liabilities of $1,200,000. The owner originally invested$200,000 in the business, but has not made any further investments or taken any withdrawals. What is the first year's net income for Lockerbie and Role Company?

At the request of the Board of Directors, internal auditors perform the audit function to protect shareholder interests.

Business events do not affect the accounting equation

Generally accepted accounting principles are

Revenue is recognized in most businesses

The monetary unit principle means that transactions are expressed using units of money as the common denominator.

The first section of the income statement reports cash from operating activities

Which of the following statements is correct regarding sales invoices?

How does the going concern principle affect reporting asset values of a business?

The business entity principle

A liability expressed by a written promise to make a future payment is usually called an account payable.

Describe the main user groups, their members, and their uses of accountinginformation.

Which of the following is an example of a source document? 113)

Internal operating functions include research and development, distribution, and human resources.

To include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with the:

If a business is not being sold or closed, the amounts reported in the accounts for assetsused in operations are based on costs. This practice is justified by the:

Something of value, such as products, services and money, is called a(n)

A statement of financial position is another name for

Exchanges between the entity and some other person or organization are

An owner's cash investment in a business creates an asset (cash), a liability (note payable), and equity (owner investments).